Bitcoin Mining Tax Break: A Lifeline from Debt Ceiling Talks?
A proposed U.S. agreement aimed at preventing a government debt default might remove a potential tax on Bitcoin mining, signaling relief for the cryptocurrency industry and potentially fostering further growth and innovation.
Bitcoin miners could breathe easier after Ohio Rep. Warren Davidson revealed that a tentative agreement intended to avert a U.S. government debt default may eliminate a proposed energy consumption tax on crypto miners. This could potentially remove a significant obstacle for the sector, promoting continued growth and innovation.
The proposed legislation, the result of intense discussions involving President Joe Biden and House Speaker Kevin McCarthy, seeks to suspend the debt ceiling for two years, permitting continued government borrowing. Despite Biden's initial intentions for the bill to include tax hikes on corporations and high-income individuals, current drafts suggest such tax increases are unlikely, potentially reflecting compromises for wider bill support.
The proposed tax on the Bitcoin mining industry, part of the effort to prevent a debt default, appears to be off the table, according to Davidson. Pierre Rochard, Vice President of Research at Riot Platforms, expressed concerns about the lack of reference to Bitcoin mining in the draft bill, the “Fiscal Responsibility 5 Act of 2023,” wondering whether the proposed Digital Asset Mining Energy (DAME) tax had been scrapped.
Introduced in March, the DAME tax aimed to impose a 30% tax on crypto mining activities, targeting both Proof-of-Work (PoW) and Proof-of-Stake (PoS) networks, despite their differing energy consumption. The Biden administration justified this tax as a measure to mitigate environmental and societal harm from crypto mining. The final decision on the legislation will be made on May 31.
